Luca Cico: Hong Kong and Macau are open for business with Italy.

Edoardo Bonatti
12 febbraio 2019


Luca Cico is the President of the Italian Chamber of Commerce in Hong Kong and Macau since 2017. He has a solid multicultural background boasting multiple experiences in Europe and in the Asia Pacific area in leading multinationals such as Mars, Colgate Palmolive, Pirelli, Ferrero, Bacardi and Coty in which he had managing roles in Asia Pacific regional market since 2000.

Italian flag Testo disponibile in italiano (PDF – 180 KB)

The interview You can boast a long experience in the Asian markets: what have you learned during all these years helped you in your role as President of the Chamber?

Cico: At the attitudinal level, I have always kept my curiosity, flexibility, proactivity and, much more importantly, reactivity. Having had experience in different sectors in many (if not all) of the Pacific Asia countries helps to understand more easily the problems faced by our members, potential members, and our many partners. Being a born & bred corporate animal, I manage the Chamber as a company, in terms of governance (planning processes, reporting, P&L management, and transparency), administration and development of human resources – our “fixed” team has an average age lower than 28 years old. This helps them, as well as the about 40 Italian interns that we host annually, in having more in having professional opportunities outside the Chamber, and out of the product and services portfolio management.

Hong Kong and Macau are, by their very nature, some very special places in which a foreign Chamber of Commerce can operate. Are there any services or special activities promoted by the Chamber with respect to its Chinese and international counterparts?

The classic services are our B2B ones (aimed at companies interested in entering the local market: searching and selecting potential partners such as importers and/or big retailers groups, support in the negotiation, up to the management of the following promotional events), promotional events for our members’ products and services and networking events (over 130 per year). In all this, we are not different from other Chambers, but from the feedback we receive, I would say that maybe “Italians do it better”. This has been recognized by the fact that some of our companies have asked us to manage their business events from conception to completion, which led us to create our own Event Management Service. What I can say – without sounding too prideful – is that our Annual Gala Dinner, for the number and “specific weight” of the local political and entrepreneurial personalities present every year, is recognized as one of the signature events of Hong Kong’s business community. This is a very positive thing, mostly for the benefit of our sponsor partners –which I would like to thank for their irreplaceable support – and their brand visibility. In the end, the mission of the Chamber is and must be aimed at, supporting the development of Made in Italy – Made by Italians.

The Chamber is very committed to supporting networking events in addition to the more traditional activities of promoting Italian culture and products. Can you tell us what usually emerges during these occasions? Is there a manifest interest in Italy as a destination for investments?

What we try to do is to make it clear that Italy offers much more than that for which it is already recognized (food & beverage, fashion), and that our much-admired creativity is also behind the excellence in many other sectors such as mechanics, components and business’ services such as logistics, for example. There is some curiosity, but as it happens the Italian context, certainly not the best as the “easiness to do business” concerns (legislative complexity, bureaucracy more than administration, rigidity in the management of labour relations, tax burdens for companies), represents a big obstacle.

Given their de jure status as Chinese Special Administrative Zones but de facto management, in accordance with the principle of “one China, two systems”, as city-states, it is more difficult to understand what happens in the two cities when taken as units. Does the business ecosystem of Macau and Hong Kong have its own characteristics, as to differentiate it from the rest of the PRC’s one?

Very unlike Mainland China, Hong Kong, and Macau are two different regions with special status that have very different dimensions and characteristics between themselves. Hong Kong has a population of 7.3 million, while Macau has 0.7 million inhabitants, a GDP of 341 billion USD opposed to the seven billion USD of Macau. Services represent over 90% of GDP for both, mainly gambling and tourism for Macau while in Hong Kong there are financial services, trading and logistics, and professional services as well. It should be noted that The Heritage Foundation once again nominated Hong Kong as the world’s freest economy in its 2019 Index of Economy Freedom, while Macau is in 34th place and China in 100th place, confirming what the representatives of the local government declare in every meeting: “Hong Kong is open for business”. This is evidenced by its many current laws (tax relief for small businesses/start-ups, support for investment in R&D, fast track initiatives such as visas for foreign talents).

Hong Kong is one of the cities with the highest per capita income in the world, thanks to its strong vocation for finance and an increasingly dynamic service sector. The huge profits made by its inhabitants in which sectors are usually reinvested?

In terms of GDP per capita this statement is true (61,500 USD, a very high figure but also far behind Macau’s 110,000 USD). In terms of monthly income per capita, reality is a bit different: government statistics indicate a median income of 18,000 HKD (equal to about 2,000 Euros), with more than 12% of the active population earning less than 5,000 HKD (600 euros) but with 10% over 50,000 HKD (6000 euros). If we consider that Hong Kong always appears in the top spots of any research on the cost of living (housing, specifically), the majority of the population spends a large portion of their disposable income in housing expenses (rent or mortgage), and then in their children’s education. This is obviously different for the top earners: family offices, which manage the assets, evaluate any type of investment: good business is always good business.

The two cities are often referred to as tax havens in government blacklists, even though they committed to complying with international standards on bank transparency in 2009. What can you tell us about the Chamber’s activity in relation to these facts?

We need to be clear about this: Hong Kong, following the signing and ratification of the Conviction against double taxation, is no longer on the blacklist. As a Chamber, we have been very active and “vocal” in the dialogue with the government when, following the implementation of the required rules, many companies and their staff have encountered great difficulties in opening bank accounts, which were resolved thanks to the active collaboration of the government and of local banking institutions.

Italy is one of the major centres of attraction for Chinese foreign investments. Which role do the two cities play in this flow of capital to the West? Are there companies or individual investors who particularly favour Italy and the opportunities offered by its economy?

Hong Kong is one of the leading global financial centres, home to many Chinese financial companies and local investment funds that, in addition to the already mentioned family offices, are always looking for good opportunities. Certainly, many Italian companies excelling in several industrial sectors are suffering – if I can say so – of “financial dwarfism” and cannot find the necessary sources of funding to expand: they can be of great interest.

What, in your opinion, could the Belt and Road Initiative represent for the exchange of goods and capital between China, and in particular Hong Kong and Macau, and Italy?

I think that the Belt and Road Initiative, and its potential impact that goes beyond what the financial and goods flows will be, is something that still needs to be well understood not only by the economic and business world but also by the political one, both Italian and European, to then work reasonably with the Chinese government. Something much more relevant is the Greater Bay Area. This initiative aims at the creation of a bay area in competition with those of San Francisco, Tokyo and New York through the union of the forces of a world class high tech innovation centre (Shenzen), a top financial and professional services hub (Hong Kong), and a mature and innovative manufacturing centre (based in Guangzhou and seven other cities in Guangdong) with tourist destination like Macau. None of the other current bay areas has all these characteristics.

Hong Kong and Macau represent the vanguard of the Chinese economy and finance. Can this perennial interest towards the future result in greater attention from local investors for the flourishing reality of innovative Italian start-ups, surpassing those that are the classic sectors of Made in Italy that are appealing to foreign investors?

Of course, even more so as the Hong Kong government intends to make an innovation hub out the city. This is also supported by huge investments backing innovative companies (tax deductions, financial support, infrastructure, and so on). I would mention two initiatives in particular that were born thanks to the great commitment of Italian entrepreneurs, companies and professionals and strong support from the Italian Consulates in Hong Kong & Macau and Guangzhou, and our Chamber:Startit.Asia and GBA Innovation Road Initiative, both in their second year. Startit.Asia focuses on promising Italian start-ups: five of them are selected and taken to Hong Kong and Shenzen for a week of meetings with innovation centres, universities, and potential investors. On the other hand, the GBA Innovation Road Initiative is aimed at Italian SMEs that may be interested or interesting for the local market and investors.

Looking at sectors in which Italy is a leading country in the world like tourism, you think that Honk Kong and Macau entrepreneurs may be willing to invest into large hospitality structures or real estate properties, also when we take into account the fact that both cities are famous for their urban overcrowding?

Looking at the number of tourists over surface ratio, Italy (the fifth most visited nation in the world with 58 million tourists) pales in comparison with Hong Kong (the most visited city in the world with 28 million visitors) and Macau (fifth with 18 million): to make a fair comparison, Rome with its 9.7 million is in 15th place. What allows cities as densely populated as Hong Kong to attract and sustain such an influx of tourists without undermining, too much at least, the residents’ quality of life are mainly the ease of movement thanks to efficient public transport at low cost, and to an affordable dining offering. Certainly the interests of tourists who visit Hong Kong (shopping and leisure in amusement parks like Disneyland and Ocean Park) and Macau (gambling and, more recently, also short family vacations) are very different from those of tourism in Italy (cultural tourism and food and wine ), as well as the countries of origin (for Hong Kong and Macau mainly Mainland Chinese). As for investments in Italy by local investors, we have to repeat what we said before: Italy is unfortunately perceived as too complicated and difficult “to navigate”.

The new visa for Italian investors is designed specifically for non-EU entrepreneurs who want to invest at least half a million (in start-ups) or one million (in other companies) euros in Italy. The visa is also available for the philanthropists whom I intend to donate for the preservation of Italian cultural heritage. Can the visa encourage these two categories to invest or donate in Italy?

I think that there is greater interest by Hong Kong entrepreneurs in potential investments to acquire some of our noteworthy technological know-how. I think that the visa may attract foreign investors, however, the real problems start appearing once the businessman settles his activity in Italy: as a country, there is still much work to do here. As far as cultural heritage is concerned, there is a huge interest from the Hong Kong government in having displays and exhibitions of our “treasures”, something to which our Consul General is actively working and to which we as a Chamber are giving all the necessary support. For eventual donations by philanthropists they are, discouraged by the fact that Italy is still perceived as a “country no easy to do business within”

The subsidized tax regime designed by Italy for those who transfer their tax residence, with a flat tax of 100,000 euros a year on income earned abroad, is another measure designed to enter into synergy with the visa for investors. Do you think that it could represent an additional incentive for those wishing to move to Italy?

It depends on where they are transferring: in Hong Kong, personal income tax and business taxes are between 15 and 17%. That aside, other factors play an important role in their choice, such as the university teaching offer. Except for some very specific course, Italy is not “on the radar” nor of the Hong Kong parents and students nor of the local high schools, as Italian universities are not included in the latter’s “feeding system” which are, for easily understood reasons, very connected with the UK and Canada above all, while Australia and the USA follow immediately after.